Oil gains as traders weigh prospects of Hormuz reopening

"If Hormuz were to reopen more fully, a further leg lower in crude is possible, but the market is unlikely to price a complete return to pre-conflict levels overnight," KCM chief market analyst Tim Waterer said.

"The biggest risk right now is that optimism around a deal proves premature and negotiations stall or break down again. That would quickly re-inject risk premium into prices."

At the heart of the dispute remains Iran's nuclear programme and that is unlikely to be resolved quickly ... Iran also understands the importance of its geographical position and the leverage that the Strait of Hormuz provides, so the risk of prolonged uncertainty remains," said Priyanka Sachdeva, head of market insights at Phillip Nova.